NZD/USD surges to near 0.6040 as investors digest Middle East tensions

NZD/USD gains sharply to near 0.6040 as demand for risky assets improves despite tensions between Israel and Iran.
Israel struck military and nuclear facilities in Iran, aiming to restrict them from building nuclear weapons.
This week, the Fed is expected to leave interest rates steady in the range of 4.25%-4.50%.

Sagar Dua FXStreet

The NZD/USD pair is up 0.5% to near 0.6040 during European trading hours on Monday. The Kiwi pair strengthens as demand for riskier assets has increased, while tensions between Israel and Iran remain intact. Theoretically, risky assets underperform, and demand for safe-haven bets, such as the US Dollar (USD), increases amid heightened geopolitical tensions.

Last week, the Israeli army launched a series of attacks on military bases and nuclear facilities of Iran early Friday to stop Tehran from building nuclear warheads.

The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, ticks down to near 98.00 after reversing early gains. Meanwhile, the New Zealand Dollar (NZD) outperforms its peers as the market sentiment has turned favorable for risky assets.

New Zealand Dollar PRICE Today

The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the strongest against the Japanese Yen.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.30%	-0.13%	-0.29%	-0.14%	-0.56%	-0.53%	-0.04%
EUR	0.30%		0.05%	-0.02%	0.17%	-0.14%	-0.22%	0.27%
GBP	0.13%	-0.05%		-0.04%	0.11%	-0.18%	-0.27%	0.21%
JPY	0.29%	0.02%	0.04%		0.16%	-0.57%	-0.60%	-0.16%
CAD	0.14%	-0.17%	-0.11%	-0.16%		-0.36%	-0.39%	0.10%
AUD	0.56%	0.14%	0.18%	0.57%	0.36%		-0.08%	0.41%
NZD	0.53%	0.22%	0.27%	0.60%	0.39%	0.08%		0.49%
CHF	0.04%	-0.27%	-0.21%	0.16%	-0.10%	-0.41%	-0.49%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).

On the domestic front, the US Dollar will be influenced by the Federal Reserve’s (Fed) monetary policy announcement on Wednesday. According to the CME FedWatch tool, the Fed is expected to leave interest rates steady in the range of 4.25%-4.50%.

Investors will closely monitor the comments from Fed Chair Jerome Powell at the press conference, following the interest rate decision, to get cues about when the central bank will start reducing its key borrowing rates. The major highlight of the Fed policy would be the Fed’s dot plot, which shows where officials see interest rates heading in the near and long term.

Ahead of the Fed’s monetary policy announcement, investors will also focus on the Retail Sales data for May, which will be released on Tuesday. The Retail Sales data, a key measure of consumer spending, is expected to have declined by 0.7% on month.

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).

GBP/USD remains weaker as UK-US yields narrow

GBP/USD extends its losses for the second consecutive day, trading around 1.3450 during the Asian hours. The pair depreciates as the British Pound softens even as United Kingdom political risk fades.

EUR/USD weakens amid Middle East tensions

EUR/USD extends its losses for the second consecutive day, trading around 1.1520 during the Asian hours. The currency pair faces downward pressure as the US Dollar gains strength, propelled by renewed safe-haven demand among global investors.

How Wall Street rigs the game [Video]

In this week’s Live from the Vault, Andrew Maguire is joined by Peter Antico and Sean Stone to discuss the Paradigm of Money - an in-depth expose of financial market corruption, from naked shorting to the two-tier system that protects Wall Street.

Bitcoin under pressure, Ethereum trades sideways, Ripple gravitates toward $1

Bitcoin and Ethereum remain under pressure after mild gains, while Ripple slides over 5% so far this week. BTC faces rejection near a key resistance barrier, and ETH has been trading sideways for the last 22 days. At the same time, XRP is gravitating its correction toward the key $1 support zone.

Markets question Fed's inflation resolve after July FOMC meeting

Federal Reserve Chairman Kevin Warsh continues to project a tough stance on inflation, repeatedly promising to restore price stability and keep inflation anchored at the central bank's longstanding 2% target. But according to Mike Maharrey in this week's Money Metals Midweek Memo, markets are beginning to judge the Fed by its actions rather than its rhetoric—and so far, they aren't convinced.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.